New Red Flag Regulations

Jason Morris

Marketwatch, one of the leading internet portals for financial information is reporting that less than one third of US Banks will be ready to meet the new “Red Flag” regulations in November.

With the November 1, 2008 compliance deadline looming, new research from TowerGroup finds that many US banks have mistakenly considered compliance with the “Red Flags Rules,” as they are known, merely an administrative exercise — and as a result, most will need to take rapid action to meet the more stringent regulatory demands.

Last month Attorney Pamela Devata wrote a guest article for employeescreen University to help prepare employers for this looming deadline.  The Fair and Accurate Credit Transactions Act of 2003 (FACTA) have specific directives for users of consumer information that are aimed at uncovering and preventing incidents of identity theft. These new regulations go into effect on November 1, 2008 and require the creation of a number of new policies and procedures for specified entities. Some of the regulations apply to all users of consumer reports, where others are specific to financial institutions and creditors.

According to Pam:

FACTA or the FACT Act as it is sometimes referred to went into effect in December 2003 and amended the federal Fair Credit Reporting Act (FCRA) in a number of ways. As it relates to identity theft prevention, FACTA instituted a procedure to help users of consumer reports combat identity theft by creating a notion of “red flags” when identity theft was suspected. In FACTA, a “Red Flag” is defined as a pattern, practice, or specific activity that indicates the possible existence of identity theft. A “user” of a consumer report includes entities such as employers who obtain consumer reports for the purpose of making employment (hiring, promotion, firing, etc.) decisions, as well as financial institutions, and granters of credit who use the information contained in consumer reports to issue credit cards, loans or mortgages, and other such activities.

The moral of this story?  We are ready, are you?

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Jason Morris

President & Chief Operating Officer at EmployeeScreenIQ
A veteran screening and risk management professional, Jason Morris founded EmployeeScreenIQ in 1999 and acts as the company’s chief operating officer and president. Morris is a frequent speaker delivering captivating, interactive discussions on background checks, global screening, recruitment and staffing. He educates audiences in best practice initiatives as they relate to organizational employment screening programs. Morris has been quoted in numerous business and industry publications including The Wall Street Journal, MSNBC.com, USA Today, New York Times, among others. He is also a licensed private investigator in the states of Ohio, Illinois, New Jersey, Texas, Arizona and Nevada.
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